Chittagong Port Tariff Surge Set to Raise Prices of Goods

Chittagong Port (File photo)

Despite strong objections from users and traders, the new tariff structure at Chittagong Port will take effect after midnight next Tuesday, raising port charges by nearly 41 per cent. Analysts warn that the move could turn the country’s principal seaport into one of the most expensive in the region and trigger a ripple effect on the prices of imported goods across Bangladesh.

The decision comes at a critical time, just before the government transfers the operation of four major container terminals to foreign companies. Once the handovers are complete, a large portion of port revenue will go directly to these foreign operators, while the port authority retains a negotiated share.

According to official documents, the International Finance Corporation (IFC), a member of the World Bank Group and transaction advisor to the project, previously stated that the existing tariff structure was “insufficient to attract private investment.” Following its recommendation, the port authority accelerated plans to revise charges — a move that will now be implemented on Tuesday.

Costs passed on to traders and consumers

Industry experts believe that the tariff hike will lead to a proportional rise in logistics and trading costs. Shipping companies have already begun adjusting their rates to offset the new expenses, while importers and exporters are preparing to pass these costs on to consumers.

Economists caution that the move may worsen inflationary pressure. Professor Anu Muhammad, an economist, observed that the tariff increase serves corporate interests rather than public benefit. “This decision is not aimed at improving port capacity but at favouring foreign companies. The rise will raise import costs, which consumers will ultimately bear, pushing inflation higher,” he warned.

Sharp rise in container handling costs

A review of the port’s audited accounts for the 2023–24 fiscal year shows that an additional charge of approximately USD 39 (Tk 4,395) will now apply per 20-foot container. Shipping lines will bear the initial burden but are expected to transfer it to importers and exporters, who will incorporate the extra cost into product prices.

Container transport rates have seen the highest increase. In response, several major global shipping lines have announced higher surcharges. Denmark-based Maersk Line has raised its terminal handling charge for 20-foot containers from USD 120 to USD 165 — an increase of USD 45 per container — while charges for 40-foot containers will jump from USD 205 to USD 310.

Earlier, other shipping lines, including CMA CGM, CNC, and ANL, announced additional surcharges of USD 45 per 20-foot container, effective later this month. Together, these companies handled more than one-third of all containers at Chittagong Port in the first seven months of the current fiscal year.

Regional competitiveness at risk

An IFC study conducted earlier this year compared port charges across 14 major ports in South and Southeast Asia. Before the new tariff increase, Chittagong ranked among the more expensive ports in the region, with an average handling charge of USD 126.66 per container — higher than most ports in India, Malaysia, Vietnam, and Cambodia.

Once the new tariff takes effect, the cost per container is expected to rise to around USD 186, making Chittagong the second most expensive port in the region, behind only Sri Lanka’s South Asia Gateway Terminal.

Industry insiders warn that this could weaken Bangladesh’s export competitiveness, particularly in the garment sector, where thin profit margins already limit exporters’ ability to absorb extra costs. “Foreign buyers will be reluctant to pay more,” said one exporter, adding that the burden will fall on Bangladeshi businesses, possibly resulting in reduced export orders.

Impact across industries

The increase will particularly affect industries dependent on containerised goods, such as manufacturing and consumer imports. Sectors importing raw materials in loose or bulk form — including fuel, cement, steel, and food grains — are expected to face smaller cost increases. However, since 99 per cent of the country’s containerised cargo passes through Chittagong Port, the overall impact on national trade and production costs will be significant.

Business leaders have warned that higher logistics costs will eventually be reflected in market prices. “A sudden 41 per cent tariff hike will sharply raise business costs,” said one importer. “Traders and shipping agents will transfer these additional costs to the final price of goods, and consumers will bear the burden.”

Foreign control over port terminals

The government has already handed over the Patenga Container Terminal to Saudi Arabia’s Red Sea Gateway Terminal International. The New Mooring Container Terminal is now operated by the UAE’s DP World, while Singapore-based PSA International and the Netherlands’ APM Terminals are also taking over key facilities. Within months, most of Chittagong Port’s terminals will be under foreign management, leaving only two smaller jetties under direct local control.

As foreign operators assume control, a major portion of terminal revenue will be transferred abroad, with the port authority receiving only a negotiated share. Observers fear this could further increase operational costs in the long run and reduce the country’s control over a vital segment of its trade infrastructure.

Government’s justification

Authorities have defended the decision, arguing that port tariffs have not been revised significantly since 1986, except for limited adjustments in 2007 and 2008. Officials maintain that the new rates remain competitive compared with global standards and that the revision was finalised after consultation with traders.

However, stakeholders argue that the increase was implemented hastily, without adequate consideration of its economic impact. As a result, the new tariff regime — coupled with growing foreign control over terminal operations — is likely to make Chittagong Port one of the most expensive and strategically vulnerable ports in Asia.